A new species of syngnathid pipefish, Festucalex rufus is described from Milne Bay Province, Papua New Guinea on the basis of four specimens, 26.5-37.8 mm SL collected from coral reef habitat in 10-20 m depth. It is distinguished from other members of the genus on the basis of a combination of features including a short snout (2.8-3.2 in head length), relatively low pectoral-ray count (10-11), and a lateral trunk ridge that terminates on the penultimate trunk ring. It is a small species with observed and collected individuals generally less than 40 mm SL and the single brood-pouch male collected measures 36.3 mm SL.